Actian PSQL Licensing For SaaS

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Anastasia Warner
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1 Actian PSQL Licensing For SaaS Actian PSQL White Paper May2013

2 This white paper is one of a series of papers designed to show how Actian PSQL can provide many of the requirements for Software-as-a-Service. Another two papers explore building multitenant applications and using the PSQL Cache Engine with VMware SQLFire to horizontally scale PSQL. The entire series is available on the Actian PSQL website at Introduction Whether or not they are prepared for it, ISVs are being compelled by market forces to consider offering their applications as an online service - SaaS. These considerations involve understanding the implications of two very important changes: 1) Moving from a business model based on one time payments for perpetual licenses (and sometimes follow on maintenance and upgrades) to a model based on monthly subscription revenue, and 2) the shift in expense of maintaining the application infrastructure from the end user who traditionally ran the application on-premise to the ISV who is hosting the application. To provide a SaaS version of an application, the ISV must first invest in the computing infrastructure and underlying software licenses needed to deliver the service. Servers, storage, operating system and database licenses must all be paid for before subscription revenue begins to flow. Where possible, the ISV will want to optimize sharing the infrastructure expense across as many subscribers as possible while still delivering an expected level of service. And, the ISV will want to be able to scale the SaaS infrastructure up and down as subscribers come and go. The challenge for the ISV is how best to amortize the expense of delivering the SaaS offering with the revenue stream provided by monthly subscription license fees. Because of these issues, ISVs that license software that uses a PSQL database need to look at licensing options to find the best fit with their businesses SaaS models. Recommended Solution PSQL Vx Server, introduced early in 2012, includes licensing features that make it particularly suited to enabling SaaS: - SaaS friendly licensing Actian PSQL Vx Server licensing was designed specifically to support virtual machines and hypervisors, both key components of SaaS infrastructure. And, all PSQL Vx licenses include rights to use the database as part of a SaaS delivery model. - Time-limited licensing Charging a reduced price for non-permanent licenses helps ISVs to grow or shrink the database licensing expense to match increases or declines in the number of subscribers. 2

The entire series is available on the Actian PSQL website at http://www.pervasivedb.com.

3 - Capacity-based licensing Charging by the amount of work the database can perform instead of by user allows ISVs to fine tune their database capacity (and licensing expense) to meet expected levels of service for subscribers. SaaS Friendly Virtual machines, and hypervisors to manage them, are a key part of SaaS infrastructure. PSQL Vx has licensing features designed specifically for SaaS in a VM environment: - License for hosting included. PSQL Vx does not require an additional license or fee to allow hosting. - Live migration support. PSQL Vx engines running on VM's can move easily from one physical machine or appliance to another. PSQL Vx Server enables hypervisor initiated automated moves of VM's across physical machines. - Failover and high availability support. When a hypervisor is alerted to a potential failure of a physical machine, it automatically moves the VM to another server. PSQL Vx Server's licensing process works in synch with the hypervisor operation. Time-Limited One of the key customer benefits of the SaaS model is that it doesn t require customers to purchase a perpetual license. However, because subscribers aren t required to pay a large upfront fee (as is the case with a perpetual license) they have more freedom to change providers, which means that the ISV needs to have a way to deal with customer churn. Capacity-based Licensing: Levels and Options Capacity-based license pricing is based on the amount of work that can be performed by the PSQL database engine. The benefit of this approach is that an ISV can manage licensing costs based on the database capacity needed to handle the subscriber base. Instead of tracking users (which can number in the thousands for some web applications) and resources required per user (which can vary widely depending on the type of user), the ISV can evaluate licensing costs in terms of overall application performance goals. The amount of work the PSQL Vx Server engine can perform is established using two metrics: number of concurrent sessions (connections to the transactional or relational engine) and amount of data in use (total size of all open files) at a given moment. PSQL Vx Server is licensed in a variety of capacities, Small, Medium, Large, and SuperSize (unlimited sessions and data), and each size includes a license for use in a SaaS environment. Capacity can be increased with the purchase of additional concurrent sessions or additional data in use so the ISV can tune the PSQL Vx Server license expense based on business requirements. Important Note: The PSQL Capacity Usage Viewer utility is a useful tool for estimating PSQL Vx Server capacity requirements because it displays concurrent sessions and data usage over 3

PSQL Vx has licensing features designed specifically for SaaS in a VM environment: - License for hosting included. PSQL Vx does not require an additional license or fee to allow hosting.

4 time for all database engines. Please visit the Actian PSQL website to learn more about estimating PSQL Vx capacity requirements. To provide further flexibility, PSQL Vx Server offers temporary capacity increase keys for both concurrent sessions and data in use known as time-limited keys. These keys come in different increments and add capacity for 60 days. The great value of time-limited capacity licensing is that it allows the ISV to scale up and down based on the expected usage of the database engine. When an ISV anticipates an increased short-term database capacity requirement, for example, ecommerce sites during the holiday season, he can add time-limited keys, adding data or session increments as necessary. When the holiday season is over, he can scale back capacity by letting the time-limited capacity licenses expire. Unlike the perpetual, user count licensing model, time-limited licensing allows the ISV to more closely tie licensing expense to SaaS revenue, dramatically reducing upfront cash requirements and financial risk. Capacity-based licensing combined with time-limited keys also enables flexibility in subscriber billing models: an ISV can charge a flat subscription rate, charge for capacity, or create a combination of the two. Example As an example of how PSQL Vx Server licensing supports the SaaS model, let s look at an ISV who provides software for accounting firms. The accounting industry has cycles. Accountants need sufficient capacity to accommodate their day-to-day operations, and the PSQL Vx Server perpetual license must be sufficiently large to handle those needs. Accountants also have occasions when usage increases significantly: tax return filing time and, to a lesser extent, tax extension filing time. For peak times, the ISV can turn to time-limited keys. After experiencing a cycle or two, the ISV can predict the approximate increase during peak times and when the upswings and downturns of the cycle occur, and purchase time-limited capacity accordingly. Different accounting firms will have different capacity requirements. Some have clients with years of returns (and a corresponding amount of data); others have brand new clients with very little data. Based on customer mix, the ISV assesses capacity requirements and purchases a permanent license to handle capacity for long-term subscriber requirements. During the course of the year the ISV may sign up 20 new customers. One will leave after the first quarter close, and four more by the end of the year. To better deal with customer churn, the ISV may decide to purchase time-limited capacity for part of the business and permanent capacity for the rest. Over time, the customer base changes: customers grow and shrink, new customers are added and some are dropped. At any given point, the ISV must evaluate the level of risk and select timelimited keys or an increase in the volume of the perpetual license accordingly. 4

These keys come in different increments and add capacity for 60 days.

5 Overall, the ISV needs the flexibility to deliver consistent service while juggling a changing customer base, cyclical demand, the differing needs of different customers, the changing needs of individual customers, and the expense of a permanent vs. a time-limited license. Conclusion Businesses choosing to subscribe to SaaS are doing so for several reasons: shifting infrastructure (hardware, OS, database) expenses to the ISV, reduced up front cost for applications, and because they have less money invested, lower cost of changing vendors. Moving from traditional per user perpetual licenses to a SaaS model is a non-trivial exercise for any ISV primarily because they are incurring all of the expense shifted from the end user and because they now need to manage those expenses in the context of a much more volatile subscriber revenue stream. Software licensing models need to have considerable flexibility to give the ISV the best chance of success when moving to a SaaS. A switch to PSQL Vx Server, with its capacity-based and time-limited licensing, provides the solution. With PSQL Vx, the ISV can scale database capacity up or down as required and keep licensing expenditures in line with subscription revenues. 5

Pervasive PSQL Vx Server Licensing

Pervasive PSQL Vx Server Licensing Overview The Pervasive PSQL Vx Server edition is designed for highly virtualized environments with support for enterprise hypervisor features including live application